Silent threat to family wealth: Why inheritance without structure can destroy decades of hard work

For all the wealth Indian families build over generations — from homes and land to businesses and investments — there is one foundational step many still overlook: laying down clear, legally sound rules of inheritance. Financial planners often warn that families don’t lose fortunes because they fail to earn enough, but because they fail to plan how that wealth should transition. Improper estate planning, experts stress, is one of the biggest reasons family assets get diluted, disputed or destroyed. 

Chartered Accountant Nitin Kaushik underscores this hard truth in a detailed post on X (formally twitter), where he warns that the real danger to family wealth begins after it is passed on. “Every family works for decades to build something… But there’s a silent threat that can dismantle everything in a single moment: what happens to that wealth after it’s passed on,” he writes. 

Marriage, mixing of assets, and hidden legal risks 

Kaushik highlights a reality few families acknowledge: marriage can reshape inheritance in ways people do not anticipate. Although inherited property may initially be considered separate, once it is mixed with marital assets — such as renovating a shared home or funding a spouse’s business — it becomes legally vulnerable. 

“Legally, once mingled → it becomes vulnerable in cases of divorce or separation,” Kaushik notes. Under Hindu law, ancestral property remains self-acquired unless partitioned or transferred. But in practical terms, mixing inherited assets dilutes protection, enabling matrimonial claims in difficult separations. 

Emotion, he argues, often drives such decisions: 

• Love decisions: 60% 
• Obligation decisions: 25% 
• Unplanned decisions: 15% 

In strained relationships or marital breakdowns, these choices can turn inherited wealth into contested property. 

Creditors, liabilities, and wider threat landscape 

Beyond family dynamics, inherited wealth is also exposed to creditors, lawsuits, business failures, and liabilities once it enters the beneficiary’s individual account. Even though heirs are typically liable only up to the value of the inherited estate, courts can still attach inherited assets when settling claims. 

Many families, Kaushik cautions, discover this only after significant losses: “Centuries of wealth vanish in months.” 

Why wills are not enough 

A widespread misconception, Kaushik says, is believing that a will provides protection. Instead, “a will transfers ownership of assets but doesn’t protect them.” 

Once inherited, assets can be: 

• Mixed with joint holdings 
• Attached in lawsuits 
• Misused 
• Drained through disputes 
• Pulled into marital property 

A will clarifies distribution — but does not ensure the wealth stays safe. 

Shield for generational wealth 

Kaushik points to trusts as the structure increasingly used by wealthy families — both in India and globally — to protect assets for future generations. Unlike direct inheritance, trusts hold assets securely and release funds based on rules set by the original owner. 

Trusts: 

1. Hold wealth independently of beneficiaries 
2. Block outside claims from creditors, ex-partners, and litigants 
3. Protect against emotional or impulsive decisions 
4. Preserve assets for children and grandchildren 
5. Keep wealth within the family across decades 

“Think of it like a vault with a brain,” Kaushik writes, describing how trusts maintain control even amid emotional decisions or legal pressure. 

Courts typically respect genuine trust structures, though those created to evade creditors can be challenged. 

Why more Indian families are turning to trusts 

India’s landscape of rising entrepreneurship, volatile marriages, digital lending pressures, and litigious business environments has pushed even middle-class families toward formal wealth-protection mechanisms. 

The need is reinforced by evolving legal nuances: 

• Daughters have equal inheritance rights under the 2005 Hindu Succession (Amendment) Act 
• Inherited ancestral property loses its nature if mixed with personal assets 
• Creditors can claim inherited assets 
• Trusts require careful setup with legal, tax, and stamp-duty compliance 
• Different personal laws — from Hindu to Muslim inheritance — affect planning choices 

Kaushik ends with a sobering reminder: families often act only after a crisis — when assets are already frozen, contested or lost. “Real wealth-building is not just earning,” he writes. “It’s ensuring wealth survives the next generation’s decisions, relationships, and risks.” As families increasingly recognise the fragility of generational wealth, Kaushik’s core question becomes more urgent: Is your legacy protected beyond just a will — or is your family wealth exposed without you realising it?